Bermuda-based Ironshore Insurance achieved most of what it hoped for in a successful first year in business, but one of its primary aims remains outstanding — to establish a foothold in the London market.

Ironshore's chief executive officer Robert Deutsch said although his company's attempt to buy Heritage Underwriting had been rebuffed, that was not the end of the specialty insurer's attempts to buy into the Lloyd's market.

"In 2008, we certainly want to establish a presence in London," Mr. Deutsch said. "It's true that we were interested in Heritage and we made an offer but it was not high enough for them, so we moved away from that.

"London is strong for the kind of specialty business we like. It has people who are talented in that field and it would make good use of our capital. The London market is licensed throughout the world and it offers more entries to more markets.

"We want to establish ourselves there, either by building a UK operation from scratch or by buying an existing operation. But if we are going to buy, then we will be very disciplined about the price we pay."

Reports in the UK financial press in recent months have linked Ironshore with interest in acquiring other Lloyd's insurers, including Kiln and Hardy's Underwriting, but Mr. Deutsch said Heritage was the only company Ironshore had approached.

Aside from its efforts to create a London branch, Ironshore has made huge strides during its first 12 months, since it opened its Victoria Street offices for business a year ago. One of its creators was Robert Clements, sometimes described as the "father of the Bermuda insurance industry", who was a co-founder of Ace and XL Capital.

Backed by more than $1 billion in capital, Ironshore was set up as a primary insurer, rather than a reinsurer, "in response to the crisis conditions in the US property catastrophe insurance markets". Its initial focus was on southern, wind-prone areas of the US. "We expected to expand first into London and then into the US, but that has flip-flopped," Mr. Deutsch said. "We are very focused on making an underwriting profit and we found a team of people in the US with a good track record of making an underwriting profit to enable us to set up there."

Two of those key executives are Greg Flood and Mike Mitrovic, who teamed up in July last year to head IronPro, a New York-based entity set up in June by Ironshore to provide professional liability insurance, focusing on directors and officers liability programmes. In October, the group expanded its US reach into the specialty construction insurance market with the creation of IronBuilt, based near Boston and headed by president and industry veteran Joe George.

In its first 12 months, Ironshore has written $315 million in gross premiums through its Bermuda office and another $15 million via its US operations. Although that falls short of the company's gross premiums target of $500 million, Mr. Deutsch said the projection had factored in a presence in the London market. In addition, its all-important top ratings from rating agency AM Best had not arrived until mid-February and the company had been lumbered with the labour-intensive task of getting licences to operate in the US — state by state. So far, the company has been approved by 33 states.

The softening insurance market, which has seen rates tumble across virtually all lines of business, means Ironshore will grow more slowly than planned in 2008, said Mr. Deutsch, as it focuses on making an underwriting profit, rather than building up its market share by agreeing to unrealistic rates.

Capital has poured into the industry since hurricanes Katrina, Rita and Wilma wreaked havoc on the US Gulf Coast and caused more than $60 billion of insured losses. With an absence of major hurricanes making landfall in the US more than the past two years, competition has grown and rates have come down substantially.

"Insurance companies have short memories and it causes us great concern," Mr. Deutsch said. "We will start walking away from business that is underpriced. People seem to forget that we did have a category-five hurricane last year, Dean, that if it had tracked a few degrees north, could have caused massive damage.

"The accumulation of wealth on the US coast is mind-boggling. And the idea that rates for those people should be low and subsidised by taxpayers throughout the country is a bad idea. I believe that when government get involved in risk sharing, as it has in Florida, then you will end up with a problem."

The financial crisis spreading around the globe, sparked by the US sub-prime mortgage crisis, could present ongoing problems for the insurance industry, Mr. Deutsch said, but it also presents opportunities for a young company like Ironshore.

"As stocks go down, investors lose money and then investors sue," he said. "The lawsuits will go after executives, saying they did something wrong. The sub-prime debacle will have people suing to collect from any deep pocket they can.

"What kind of insured losses this will lead to, it's difficult to say, because it's only just starting to show."

According to Mitchell Blaser, Ironshore's chief financial officer, Ironshore will be better placed than many insurers to take advantage of the current professional liability climate. "We have only just entered that market and so we're not saddled with old business," Mr. Blaser said. "That gives us a real advantage."

The company's experience of setting up shop in Bermuda has been a good one, building up from six employees to 36, most of whom are Bermudian. "We've been able to hire many talented Bermudians," Mr. Deustch said. "There is a good workforce here, good infrastructure, good airport and people are friendly. We also get along well with the regulator, the Bermuda Monetary Authority.

"But office space is hard to find, hotel capacity is not sufficient and housing is hard to find. This is a small Island, so there will always be limiting factors."

Ironshore has become involved in the community through its $35,000 sponsorship of the Western Counties Cricket Association.

Some of Ironshore's expansion this year will be in developing economies, and it is already providing insurance for clients in Russia, India, Dubai and Mexico, for example. A foothold in London would increase that global reach further.

Ironshore remains a private company and with no need to seek capital from the markets, it has no plans to go public and take on the extra pressures brought on by having to publish quarterly results for demanding investors.

Despite the soft market and the world's economic woes, Mr. Deutsch is confident of a successful 2008 for Ironshore, even though he acknowledges it will be a tough year for the industry. "We're excited about our prospects and we'll be looking to hire more local people," he said.